By Ashifa Kassam and Belén Carreño
MADRID (Reuters) - The head of Spain's centre-right Ciudadanos quit on Monday after voters deserted his party in droves, potentially easing the way for a Socialist-led government following a national election that produced another fragmented parliament.
The Socialists said they would to act fast to form a government after winning the most seats, though they ended on three fewer than they held after finishing first in the previous election in April.
"We will try to keep our promise to form a government as quickly as possible because the country needs it," said senior Socialist official Jose Luis Abalos, expressing hope that it could take office before the end of the year.
The party's leader, acting premier Pedro Sanchez, had gambled on a repeat ballot to try to break the political deadlock that ensued after he failed to agree an alliance with left-wing Unidas Podemos.
Overall, a polarised electorate awarded neither right nor left-wing parties enough seats to govern with a majority in Sunday's ballot, Spain's fourth since 2015.
However, the outcome - played out against a tense backdrop overshadowed by a violence-tinged secessionist crisis in Catalonia and a sharp rise in support for far-right Vox - has left Spain's political landscape even more fragmented.
The Socialists immediately ruled out a grand coalition with the conservative People's Party (PP), which finished second.
But the resignation of Albert Rivera - whose market-friendly Ciudadanos shrank to just 10 parliamentary seats from 57 in April as Vox rose to 52 from 24 - could offer Sanchez a helping hand.
Rivera took a hardline stance against cooperating with him following April's election, but others in his party are more open to cooperation.
"It's time to unite Spaniards. The political leaders can divide or look (to)... build bridges," a visibly moved Rivera said in his resignation speech.
'THE COUNTRY NEEDS A GOVERNMENT'
The rise of Vox, the first far-right party to get more than one lawmaker since General Francisco's Franco's Fascist regime ended with his death in 1975, may also concentrate minds on the left.
Socialist Abalos ruled out another election, which he said would mean "an institutional failure", and said Sanchez would start calling other party leaders on Monday, saying Ciudadanos could be a possible support.
To be confirmed as prime minister in a first-round parliamentary vote, Sanchez would need an absolute majority, implying the support of left-wing Podemos and Mas Pais as well as Ciudadanos and several non-separatist regional parties on top of that.
A second-round vote would require only a qualified majority, however, meaning a mix of abstentions and more 'yes' than 'no' votes would suffice.
Market reaction to the election result was muted as the euro zone's fourth-largest economy remains on the growth path.
But many voters were downbeat.
"I think it (election) has been a great blow to us all, because we are in the same place as before. The same or even worse," said Lola, a 62-year-old public servant.
CATALONIA SIMMERING
The Catalan crisis also immediately reared its head as some 500 pro-independence protesters blocked a border point between France and the Spanish region on an important truck route stopping traffic just hours after the election.
Organisers said their goal was to call upon the international community "to make the Spanish state understand that the only way is to sit down to talk".
Catalonia has been rocked by mass protests since long prison sentences were handed down in mid-October to nine leaders of a failed independence bid in 2017, putting the secessionist drive at the forefront of voters' minds in the election.
Joining a nationalist wave in other parts of Europe, Vox has benefited from vehement opposition to the secessionist drive, and its anti-immigrant stance has also struck a chord.
Despite the extremist shift on the right, the overall balance of power between left and right has however changed little compared with the April election.
The PP, which alternated in government with the Socialists for decades after Franco died, recovered from a disappointing result in April to take 88 seats.
Sanchez may need at least tacit support from the PP - which refused to abstain in votes on his premiership after the April ballot - to be named prime minister.
Senior PP official Teodoro Garcia Egea told Onda Cero radio on Monday that Sanchez had not asked his party to do so. "Sanchez has not asked us to abstain, but even if he did we wouldn't give it to him because we don't trust him," he said.
Independent political analyst Miguel-Anxo Murado said Sanchez has failed to get enough seats to force the far left to back him without agreeing to a coalition.
"No one has won," he said. "The best success has been for ...Vox, but this win does not give them any power... It's not enough for the right-wing bloc to form a government."